In the new tax law, there’s no going back (on Roth Conversions). As a result of the new legislation, taxpayers are no longer able to “recharacterize”, or undo, a previously executed Roth conversion. Roth conversions allow for an individual to convert some, or all, of an Individual Retirement Account (IRA) into a Roth IRA, subjecting … Continued
The Qualified Charitable Distribution (QCD) remains permanent. Qualified Charitable Distributions (QCD) were made permanent by the Protecting Americans from Tax Hikes (PATH) Act of 2015 and were untouched by this new tax overhaul. IRA owners age 70½ or older can distribute up to $100,000 per year from their IRA directly to charitable organizations. These distributions … Continued
529 plans can now be used to fund up to $10,000 of private school tuition per year. 529 plans are funded with after-tax dollars, but then all income and gains are sheltered within the plan over time, and withdrawals are free of both federal and state tax as long as the proceeds are used for … Continued
Funds within 529 accounts can be transferred to 529 ABLE accounts for people who become blind or disabled before age 26. 529 ABLE accounts are available to those who become blind or disabled before age 26. Importantly, having assets in a 529 ABLE account does not limit the person’s access to key government benefits such … Continued
The tax law changes the time frame for loan repayments from a 401(k). 401(k)’s were largely left alone in this new tax bill, which is a positive outcome for employees who contribute to their company 401(k) plans. The 2018 maximum contribution to a 401(k) plan remains at $18,500, plus a catch up of an additional … Continued
Owners of pass-through businesses get a break – but it’s complicated. Beginning in 2018, a new 20% deduction for qualified business income will be available. This will effectively lower the top tax rate of small business owners from the highest new personal income tax rate of 37% to about 30%. This was a partial concession … Continued
The new tax law puts a cap on the amount of debt interest cost most companies can deduct. Interest payments have long been deductible for companies, but the new tax law now limits such deductibility to 30% of the company’s EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). This will effectively reduce the incentive for … Continued
The tax law allows companies to immediately write off 100% of equipment purchases. One of the most impactful provisions of the new tax law for mid to large size businesses is that equipment purchases can be deducted immediately, and for the full amount of the purchase, in the first year of its use. In other … Continued
The new tax law has brought about significant financial changes and opportunities for individuals and families, not least of which is the substantial increase in the estate and gift tax Lifetime Exemption amount. This amount has essentially doubled overnight, to a newly available $11.2 million per person in 2018 ($22.4 million for married couples). As … Continued
It is estimated that the newly passed tax law could result in a reduction of billions of dollars in charitable giving starting this year. Although the long-standing charitable deduction methodology was preserved, overall giving could be significantly hindered due to the new higher standard deduction reducing the number of tax payers who itemize on their … Continued